Archive | Provisions and Reserves

Here we detail about the difference between general reserve and specific reserve. General Reserve: 1. Reserve created not for any specific and earmarked purpose is known as general reserve. 2.General reserve is created to meet some future contingencies and for strengthening financial position of a business concern. 3. General reserve is utilized to meet any […]

Here we detail about the difference between revenue reserve and capital reserve. Revenue Reserve: 1. It is created out of revenue profits. 2. It cannot arise during the pre-incorporation period 3. It is created by retaining profit. 4. It can be used for payment of dividends without any precondition. 5. It is created to strengthen […]

Here we detail about the difference between reserve and reserve fund. Reserve: 1. Reserve is the amount set aside out of profits and other surpluses. 2. The basic purpose of keeping reserve is to meet any contingent liability 3. As the amount of reserve is not kept outside the business in any form so the […]

Here we detail about the difference between Provisions and Reserves. Provisions: 1. Provisions are charge on profits. 2. Creation of provision does not depend on profit. They have to be created even if there are inadequate profits or heavy losses. 3. They are created to meet a known liability 4. Creation of provision is necessary […]

Let us make in-depth study of the meaning, importance and types of reserves. Meaning of Reserves: Reserve means an appropriation of profits or other surpluses to strengthen the liquid resources of the business enterprise and not for meeting any liability, contingency or any commitment of the business. According to William Pickles, “Reserve means the amount […]

Let us make in-depth study of the concept, objectives and types of provisions. Concept: Provision means setting aside a part of the profits for meeting a liability in future, the amount of which is not known accurately at the time of finalization of financial statements. In any business, there may be some expected or unexpected […]

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